Tesco execs stayed silent about a massive hole in its accounts say prosecutors
Two senior former Tesco executives on trial for fraud in London were presiding over a “car crash waiting to happen” Southwark Crown Court heard today.
Sasha Wass QC, prosecuting for the Serious Fraud Office (SFO), said Tesco’s former UK managing director Chris Bush and ex-UK food commercial director John Scouler were aware of a shortfall of nearly quarter of a billion pounds in the supermarket’s accounts during the 2014-15 financial year.
Bush and Scouler have both been charged with one count of fraud and false accounting.
They both deny the charges.
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Wass said Bush and Scouler knew there was a hole in Tesco’s accounts during the 2014-15 financial year but did nothing to draw attention to it.
Wass said Bush “was acting dishonestly” and “did nothing to remedy the situation” while she said Scouler “remained silent” and “did not blow the whistle” on the “explosive information” Wass said he was aware of.
Wass told the court that Bush and Scouler connived on a series of “complex” and “clever” accounting practices that hid the true state of Tesco’s accounts from its auditors and the stockmarket.
According to witness statements a practice called “pull-forward” was used to help hit financial targets by recognising income from future accounting periods in an earlier period.
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Wass said the pulling forward of income led to a “snowball effect” whereby a new accounting period would start with a “legacy” shortfall that needed to be met, which led to further pulling forward of income to fill the hole.
It also led to what one witness called “unachievable targets” because they were based on artificially inflated numbers from the previous period.
Tesco chief executive David Lewis, who was appointed three weeks before the accounting scandal became public, is due to appear as a witness tomorrow.
The trial continues.